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Saudi Arabia to increase wheat stocks

Saudi Arabia expects to import up to 800,000 tonnes of milling wheat in the year to September 2009 as it seeks to build up stocks while scaling back domestic wheat farming, a grains authority official told Reuters.

Saudi Arabia’s state-controlled Grain Silos and Flour Mills Organization (GSFMO) plans to issue a tender in April or May for the purchase of 200,000 to 300,000 tonnes of milling wheat after it tendered last week to buy 500,000 tonnes of milling wheat, the official said Dec. 22.

“The goal is to constantly have stocks that will be large enough to cover a minimum of four months of needs and a maximum of six months,” the official said on condition of anonymity.

Saudi Arabia, previously self-sufficient in wheat, announced early this year it would start importing supplies and scale back domestic production to save precious water reserves.

The country will reduce purchases of wheat from local farmers by 12.5 per cent per year from this year, abandoning a 30-year program to grow wheat, which achieved self-sufficiency but depleted the desert kingdom’s scarce water supplies.

GSFMO is seeking to buy 500,000 tonnes of milling wheat, the authority official said, confirming what European traders told Reuters last week.

“We are not in a hurry. Right now, our stocks of wheat are about 1.3 million tonnes which is enough to cover six months of domestic needs,” he said.

“Once the delivery of this tender’s 500,000 tonnes is completed, the harvest season will start here which will keep our stocks at the level we are targeting,” he added.

The official said the kingdom may snub Russian origins in the planned 500,000 tonnes purchase after a recent 50,000 tonnes purchase of Russian wheat disappointed local millers.

“We have received many complaints from millers and bread-making plants about this batch… It had a very low protein rate. It did not match the quality criteria that we were promised we will get,” he said.

“Russian wheat is grounded for this 500,000 (tonnes) tender … In fact we will be very cautious with all Black Sea origins,” he added.

Saudi Arabia sought 12.5 per cent protein in last week’s tender for 500,000 tonnes of milling wheat.

Riyadh’s plan was to start importing wheat in 2008-09 and move to 100 per cent reliance on foreign purchases by 2015.

The country has also announced plans to invest in farmland in other countries to produce cereals.

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